ASIC takes action against Macquarie Bank for unauthorised withdrawals

The Australian Securities and Investments Commission has announced starting civil penalty proceedings against Macquarie Bank Ltd. The Aussie regulator alleged that the company failed to adequately monitor and control transactions by third parties, such as financial advisers, on their customers’ cash management accounts.

According to ASIC, Macquarie monitored in a limited way transactions made through its bulk transaction system using a ‘fee authority’. The regulator found out that these transactions did not pass through a fraud monitoring system or undergo manual checks to confirm the transactions were for fees.

ASIC Stated that the convicted former financial adviser, Ross Andrew Hopkins made 167 unauthorised transactions on 13 of his client’s cash management accounts. The withdrawals amounted to $2.9 million.

ASIC Deputy Chair Sarah Court said:

Mr Hopkins misused Macquarie’s systems by processing transactions using his fee authority to steal client funds. Macquarie failed to properly detect and prevent these unauthorised fee transactions, many of which were over $10,000 each. Mr Hopkins’ conduct is an example of what can go wrong when banks do not properly monitor their systems and implement appropriate processes.

ASIC ban

Court added:

ASIC’s case is not focused on Mr Hopkins’ conduct but rather on alleged multiple failures by Macquarie to take proper steps to monitor, detect and prevent unauthorised transactions’.

According to the Australian watchdog, the transactions were conducted between May 20016 and January 2020. During this time, Macquarie failed to take measures to prevent or detect that they were outside the scope of a ‘fee authority’ given by a customer, including misappropriating customer funds.

ASIC stated that these failures breached Macquarie’s obligations as a financial services provider. Moreover, the regulator claims that the company made false or misleading representations in the promotion and offering of limited third-party access over cash management accounts. In particular, that where a customer gave ‘fee authority’ to a third party, Macquarie represented that it would check that any transaction made under the ‘fee authority’ was actually for fees, when it did not.

Following the regulator’s involvement from December last year, Macquarie remediated Hopkins’ clients $3.5 million on an ex-gratia basis. ASIC is now seeking penalties, including a compliance order for an independent review of Macquarie’s fee authorities and fee transactions.

Hopkins was sentenced to six years in prison after. He has also been permanently banned from providing financial services or from controlling an entity carrying on a financial services business.

ASIC recently banned Mark Babbage from providing financial services or engaging in credit activities for ten years.


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